Lifetime ISAs guide

rajeshwarsrm

Alexland wrote: »

It would have been better if you had sought some feedback before closing the Nutmeg LISA - suggest you contact them urgently and ask they do not close the account.

You should have opened the AJ Bell LISA and raised a request with them to transfer the old Nutmeg LISA across. That way the same LISA would move between providers and you could have continued contributing up to the annual limit.

If you close the Nutmeg LISA, and given they required an initial contribution, you are not allowed to contribute to the AJ Bell LISA in this tax year. The new tax year stars 6th April.

Alex.

Thanks a lot Alex for your reply. I have now stopped the closure of my Nutmeg LISA account. The issue I have now is that it seems AJ Bell do not have a provision to transfer from another LISA provider, they only have the H2B ISA transfer provision. So essentially I have 2k stuck in AJ Bell and 100£ in Nutmeg.

What should I do now? - Shall I close the AJ Bell LISA now and open one with say HL who allow tranfers of LISA and ask them to do transfer from the Nutmeg LISA?

Or alternatively, can I close both these LISAs and start afresh with a new LISA as I am not going to buy a house for the next 12 months, so not bothered with the timeline being reset.

Alexland

I would not suggest you open a 3rd LISA this tax year. Have tried calling AJ Bell and asking them if they would transfer your old LISA given the situation?

Kami_J

Hello,

My husband and I each have a Virgin Money HTB account opened in 2016 and a nominal Nutmeg LISA opened early 2017 with 100 pounds in it. We are thinking of buying late this year or earlyish next and are therefore thinking to:
1. Move the money from the HTB accounts into LISAs
2. Switch from Nutmeg to Skipton, so that our savings are in cash rather than stocks and shares.

My two questions - is that the right thing to do and what are the steps of doing all the switching to do it correctly?

Thank you!

NAD57891

Alexland wrote: »

The problem is that you are not allowed to transfer part of your split Cash ISA contributions for this year into another type of ISA. Under ISA rules you must transfer both parts which may not be possible (without partial withdrawal from the regular part) if it exceeds the LISA limit for this year.

NAD57891 wrote: »

Looks like I'm in a mess then?

I understand what you're saying. This wasn't obvious to myself and I wasn't told this by Nationwide either. I thought this years subscription into a H2B transfers into the £4K Lifetime ISA allowance but the split Cash ISA is the issue.

I have just transferred a Nationwide H2B to HL Lifetime ISA.

The problem I have now is that I put money into both a Cash ISA and the H2B this tax year with Nationwide. I didn't move the money from this years subscription out of the H2B into the Cash ISA before transferring. The Cash ISA remains with Nationwide.

Why did they allow the transfer of the H2B in full... I'm going to have to ring around but I can't see how this can be easily rectified.

I rang Nationwide and explained the situation, Nationwide said what I've done is fine and I just need to stick with depositing in the Cash ISA OR other provider for the remaining tax year.

I may give HMRC a call to double check.

Alexland

Kami_J wrote: »

My husband and I each have a Virgin Money HTB account opened in 2016 and a nominal Nutmeg LISA opened early 2017 with 100 pounds in it. We are thinking of buying late this year or earlyish next and are therefore thinking to:
1. Move the money from the HTB accounts into LISAs
2. Switch from Nutmeg to Skipton, so that our savings are in cash rather than stocks and shares.

My two questions - is that the right thing to do and what are the steps of doing all the switching to do it correctly?

According to Nutmeg's own data, holding money in shares for only 1 year has around a 25% probability of a loss at the end. Now those odds might change depending on what proportion of shares and bonds you have in your portfolio but investment bonds also have the potential to suffer losses. S&S LISAs are best suited to people with an investment timeline of at least 5 years by which time the probability of loss is down to under 10%

https://www.nutmeg.com/nutmegonomics/increasing-your-chances-of-positive-portfolio-returns-the-facts-about-long-term-investing/

Anyway - firstly consider if the HTB ISA meets you needs for the property purchase - in particular is the £250k limit outside London going to be an issue as LISAs allow £450k nationwide. Also are you in a position to contribute more than the £200 per month - would the extra circa £1600 contribution limit be useful both this and next tax year?

If you do decide to switch to using the LISA for your property purchase then Nutmeg don't support HTB ISA transfers so act quickly to ask Skipton to transfer both your Nutmeg LISA and HTB ISA and top up.

Alex

Alexland

NAD57891 wrote: »

I rang Nationwide and explained the situation, Nationwide said what I've done is fine and I just need to stick with depositing in the Cash ISA OR other provider for the remaining tax year.

I may give HMRC a call to double check.

To be honest you are where you are and if HMRC detect a problem they will probably contact you anyway. If you have not sought any unfair advantage from the situation and remained within the LISA and overall ISA contributions for the year I would imagine they will be reasonable and you should still get your LISA bonus.

AR2012

Need a bit of advice around meeting the £4k allowance into a LISA with Skipton. I had a HTB ISA with Halifax (3.5%) which Ive contributed to regularly £200 a month. It matured in December and for the 2017 year I netted £174.40 on a balance of £5890.6. Ive paid in £2400 (in £200 increments) for 2017. Leaving a remainder of £2400 to meet the £4k limit.

However I'm not sure how much of the £174.40 should be deducted from the £2400 remaining to come to the true amount left to top up before the new FY.
From Skipton's remaining ISA allowance it states £16745.97 (Ive been paying regularly since opening the account). Which makes up £2400 but doesn't account for the interest earned in the FY 2017/18.

Id appreciate the input.

bigroundorange

Originally Posted by bigroundorange
I am looking into transferring my Help to Buy ISA into a Lifetime ISA.

If I transfer this tax year, then the original Help to Buy ISA would no longer exist (right?).

Would I be able to open a brand new Help to Buy ISA next tax year (i.e., from April 2018 onwards)? If so, could I open it with £1200 (rather than just £200), given that the first Help to Buy ISA account does not exist anymore? Would I still be able to get the full bonus on the LISA (with the original Help to Buy ISA amount transferred in)?

I am a first time buyer, but not in a position to buy yet and so do not know what value property I will buy in the future.

"Yes if you fully transfer the HTB ISA into a LISA (to get a bonus on the total amount) it seems likely your old provider will close the empty account but check their terms. Sure you can open another HTB ISA next tax year to benefit from the good interest rate but you can only use one account (probably the LISA to avoid withdrawal penalty) with the bonus against a qualifying property purchase.

Alex"



Thank you for the response, Alex. Just to clarify, does this mean I can put in £1200 in the first month for the new Help to Buy ISA? Obviously I will have done this already in the old Help to Buy ISA (which should no longer exist anymore, once I transfer it into the LISA), so thought it best to double check.


Thank you again.

Alexland

AR2012 wrote: »

Need a bit of advice around meeting the £4k allowance into a LISA with Skipton. I had a HTB ISA with Halifax (3.5%) which Ive contributed to regularly £200 a month. It matured in December and for the 2017 year I netted £174.40 on a balance of £5890.6. Ive paid in £2400 (in £200 increments) for 2017. Leaving a remainder of £2400 to meet the £4k limit.

However I'm not sure how much of the £174.40 should be deducted from the £2400 remaining to come to the true amount left to top up before the new FY.
From Skipton's remaining ISA allowance it states £16745.97 (Ive been paying regularly since opening the account). Which makes up £2400 but doesn't account for the interest earned in the FY 2017/18.

You probably also recieved a final interest payment from the HTB ISA upon closure?

According to our understanding of the rules the final interest payment and the proportion of the interest payment in December (circa 3/4s of it - since 6th April) that were earned this tax year count towards the £4k limit.

However the ISA Managers don't seem to be implementing this quirk of the rules.

Alex

Alexland

bigroundorange wrote: »

Thank you for the response, Alex. Just to clarify, does this mean I can put in £1200 in the first month for the new Help to Buy ISA? Obviously I will have done this already in the old Help to Buy ISA (which should no longer exist anymore, once I transfer it into the LISA), so thought it best to double check.

If the old HTB ISA is transfered and closed, you wait for the new tax year and open a new HTB ISA account I don't see why you cannot make the higher initial contribution again.